Southwest plans to reduce capacity, reevaluate 2024 financial outlook on delivery delays from Boeing

FILE - A Southwest Airlines jet arrives at Sky Harbor International Airport in Phoenix on Dec. 28, 2022. Shares of Southwest are falling in Tuesday, March 12, 2024, premarket trading as the airline said that it plans to reduce capacity and reevaluate its full-year financial outlook because of fewer expected aircraft deliveries from it supplier, Boeing. (AP Photo/Matt York, File)

FILE – A Southwest Airlines jet arrives at Sky Harbor International Airport in Phoenix on Dec. 28, 2022. Shares of Southwest are falling in Tuesday, March 12, 2024, premarket trading as the airline said that it plans to reduce capacity and reevaluate its full-year financial outlook because of fewer expected aircraft deliveries from it supplier, Boeing. (AP Photo/Matt York, File)

Shares of Southwest plunged Tuesday as the airline said that it plans to reduce capacity and reevaluate its full-year financial outlook because of fewer expected aircraft deliveries from it supplier, Boeing.

Southwest Airlines said in a regulatory filing that Boeing expects to deliver 46 737-8 planes this year. The company previously anticipated 79 737 Max aircraft deliveries, which included 58 737-8 planes.

In addition, Southwest said that it now assumes there will be no 737-7 aircraft deliveries, and it continues to assume no -737-7 planes will be placed into service this year based on the current certification status with the Federal Aviation Administration.

For the first quarter, Southwest now foresees operating revenue per available seat mile being flat to up 2%. Its prior forecast was for the metric to be up 2.5% to 4.5%. The company predicts economic fuel costs per gallon will be in a range of $2.95 to $3. That’s higher than its previous estimate of $2.70 to $2.80.

Boeing has been facing mounting pressure lately. The company is facing multiple government investigations. On Monday Transportation Secretary Pete Buttigieg said that Boeing needs to make a “serious transformation” around its safety and manufacturing quality.

The comments came one day after Buttigieg said the aircraft builder is under “enormous” scrutiny by his department since a panel blew off of a Boeing 737 Max jetliner in midflight.

Over the weekend, The Wall Street Journal reported that the Department of Justice launched a criminal investigation into the Jan. 5 blowout on an Alaska Airlines jet. That followed the company’s admission that it couldn’t find records that the National Transportation Safety Board sought for work done on the panel at a Boeing factory.

The Federal Aviation Administration, part of Buttigieg’s department, is also investigating Boeing.

Last week, Boeing, which is based in Arlington, Virginia, came under withering criticism by National Transportation Safety Board Chair Jennifer Homendy over the missing work records on the Alaska jet. She told a Senate committee that Boeing had repeatedly rebuffed her agency’s attempts to get information ever since the blowout. Boeing disputed some of Homendy’s claims; NTSB stood by her testimony.

The FAA has barred Boeing from boosting production of Max jets and gave the company 90 days to come up with a plan to fix quality-control issues.

Southwest’s stock is down nearly 15% in morning trading.

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